Payment Reform: How Consensus can Create Quality Care

Progress toward health care payment reform has been steady, and now is not the time to ease up on the pedal. The aging baby boomer population is nearing retirement, which will not only lead to an increased strain on the nation’s health care systems, but it could also result in a federal “brain drain” as decades of expertise leave the market – expertise that could be crucial for successful reform. To implement reform, contractors and their Federal counterparts must work cohesively towards condensing payer quality standards into a uniform code that crosses all funding sources – private as well as public, such as Medicare, Medicaid, TRICARE and plans purchased via the Health Insurance Marketplaces. Only then will we be able to ensure that health care services meet at least minimum quality standards no matter where the patient goes for services.

Government is Leading the Way

In the commercial sector, large employers and health plans have already started to shift away from paying for patient care based on volume in favor of paying for value. Most private companies, however, are just beginning to explore this new approach. A report released last year from the Catalyst for Payment Reform found that 89 percent of private companies are still using fee-for-service and other methods that are agnostic about the quality of care.

On the other hand, federal and state governments serve as great examples of more value-oriented service models, and as the largest purchasers of health care, their continued influence will be crucial to the future of both private and government payment reform. These reforms include incentives for adhering to best practices as well as penalties for being outside the bell curve in important measures such as post-hospitalization readmissions in Medicare.

The Payer Evolution

Before we consider the future of care delivery, let’s first explore how we arrived at this current health care payer landscape. The U.S. health care system serves two equally important economic goals: (1) to provide a competitive market economy that provides the foundation for free enterprise, and (2) to protect a citizen’s right to affordable quality health care. One of the main juxtapositions of these two goals is in the quality of care that is provided. As dozens of providers and insurers have cropped up to provide care, many different standards and reference points for quality have emerged as well.

The Great Recession forced many government institutions to drastically reduce spending, creating an environment ripe for the beginnings of payment reform. While the economy has improved, spending has not returned to previous levels, so what we’re seeing now, driven in particular by agencies like The Centers for Medicare & Medicaid Services (CMS), is a strong push towards creating a consensus agreement among all those disparate payers, who all define quality differently. CMS is currently testing more than 20 models for delivering care, each of which incentivizes or reduces payment for physicians and organizations to provide quality care at a lower cost. Despite their differences, the success of these models all depend on rewarding health care organizations for better managing population health and acting as responsible stewards of resources.

Inside CMS, Quality Improvement Organizations (QIOs) serve as a great example of the agency’s new focus. A QIO or QIO-like entity consists of a group of health quality experts, clinicians and consumers who are tasked with improving the care delivered to people with Medicare. Specifically, their core functions include:

Improving beneficiary quality of care

Ensuring Medicare only pays for goods and services that are reasonable and necessary

Helping beneficiaries with individual complaints and appeals

CMS recently redesigned the QIO program to further improve its quality of services; the new program focuses on learning and collaboration, independence between being a technical assistance provider and oversight of Medicare quality measures and beneficiary appeals, flexibility, and embracing new models of care. These are all attributes that CMS would like to infuse into the health care provider community.

The Future of Reform

Given these circumstances, three major trends that will heavily impact how the health care market evolves over the next few years.

All providers will need to demonstrate value. Ultimately, no matter what payer system they’re currently using, health care providers are going to be required to meet certain quality metrics in order to receive a minimum level of payment. In short, payment will be connected to quality, either through incentive payments or via a shared risk arrangement, and although this trend is just beginning to take hold, we expect it to spread quickly in the near future.

More incentives for reduced readmissions. This is another nascent trend that will likely continues to gain momentum in a variety of acute and post-acute care settings, increasing incentives for providers if they can reduce their readmission rates, and offering some needed relief in health care spending. As services provided in institutional care settings are redirected to community and in home supports, continuity of services provided post-acute care should continue to expand and be coordinated with home and community based services to ensure an individual’s care is patient centered and addresses all the myriad of factors that can lead to readmissions.

Consumer satisfaction is critical. Payers will continue to find new, and hopefully transparent, methods to deliver care and measure the quality of how it is provided. We can anticipate the expansion quality rating systems across all service delivery modalities to try to provide normalized metrics for defining quality across the divergent American landscape of the health care delivery system. To serve as the backbone quality in health care delivery, it is paramount that the information on quality service delivery is communicated accurately and in a manner that is easily understood and ACTIONABLE.

In addition to budgetary pressures, the Affordable Care Act also contributed to creating a catalyst for change in the new frontier that is health care in the U.S. It’s important that everyone, not just payers and providers, pay close attention to the changes taking place and work toward improving the system as it meets both new challenges and opportunities. As the market continues to evolve over the next few years, we can all anticipate a major shift toward quality of care and improved customer service, and it is vital that we all do our part to ensure best practices are upheld. The future of payment reform, and ultimately the improvement of the nation’s health care and the health of the beneficiaries receiving care, depends on it.

About the Author

Anna Sever: Vice President, MAXIMUS Federal, Business Development,

Ms. Sever is an experienced health care and social services leader with more than 25 years of progressive management responsibilities including spearheading growth and development initiatives. For the past 14 years, Ms. Sever has been responsible for new business and program development for county, state and federal governments. Before joining MAXIMUS in 2011, Ms. Sever served as a gubernatorial appointee and has also run operations within the private sector. She holds a master’s degree in gerontology from the University of South Carolina and a bachelor’s degree in psychology from Davidson College, North Carolina.

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1 Comments

January 21, 2015

Excellent article – with over 75M baby-boomers just starting to really hit the health market, many already with chronic health problems, another frontier the government should start exploring is expanding skilled nursing facilities. Currently, there are long waiting lists to get into many private facilities, with expensive montly bills that Medicare often doesn’t cover. Creating a clean, affordable environment with quality healthcare is going to be key as this nation grows older and needs more hands-on healthcare.